Class Notes (835,007)
Canada (508,866)
Economics (1,511)
EC140 (417)
Ken Jackson (249)
Lecture 18

EC140 Lecture 18: Ch 30 - Unemployment

3 Pages
Unlock Document

Ken Jackson

Ch. 30 – Unemployment Employment and Unemployment  In the long-run, increases in employment (on average) match increases in the labour force  In the short-run, changes in unemployment depend on output gaps  People move from employment to unemployment, or between jobs, very frequently o Stable employment data hides considerable labour force movements Measurement  Unemployment rates depend on the fraction of the labour force that does not have a job  Discouraged workers are those that have stopped looking - not captured in the data  Underemployment is not generally captured o Part-time work, when would prefer full-time work o Work requiring skills much lower than a previous job o These people generally keep searching for work Consequences of Unemployment  Lost output o Permanent cost of output that is not produced  Personal costs o 7 to 12% of unemployed workers are unemployed for 12 months or longer o Long-term unemployment may lead to declines in labour productivity  Personal costs are difficult to measure - but may be larger than the output costs Market-Clearing Theories  Modeled market-clearing labour markets in EC120  Supply of labour and demand for labour determine market wage/quantity  People that aren’t working are “voluntarily unemployed” o Frictional and structural unemployment may still exist o Cyclical unemployment may exist - but only if people aren’t really looking for work What are Sticky Wages?  Menu costs o Renegotiating wages is not costless  Long-term employment relationships o Insurance value associated with stable wages o On-the-job training makes employee turnover expensive  Union bargaining o Wages as average revenue vs. marginal revenue  Fluctuations vs. long-run trends o If workers/firms believe wages will rise in the future - may keep wages where they are Frictional Unemployment  Normal turnover of labour - inclu
More Less

Related notes for EC140

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.